Passive Income Made Perfect – February 2015 PIMP Update

Near Year. New Goals. The goals are large, the passion intense, and the moniker sexy. That’s right; this is now the PIMP update. Passive Income Made Perfect. What does that mean really? Passive income is what we all are striving for, money that’s being made without another hour of work. The effort is put in up front, but the rewards will last a lifetime. ‘Made Perfect’ is really a different take on this efficiency of passive income. Whether you’re a dividend growth investor or a good old fashion Boglehead, the point is your passive income is made perfectly, without another real ounce of effort on your part.

So, now that we’re in the PIMP mindset, lets’ see how February turned out.

February Passive Income and Pageviews:

Blog Pageviews: Continuing with the record setting ways, Write Your Own Reality again broke through the clouds and saw some impressive pageviews. This goal is really a credit to the great readers and blogging community members who’ve commented, shared, linked back to me, and all around inspired me to keep on trucking along.

I’m actually ahead of schedule with this goal, and realize I might have shot too low. I’m going to keep the goal where it’s at, given we still have 10 months left of this year, and hitting the traffic goal will likely be contingent on me continuing to post each month. This of course leads me to my second goal, the months with active posting. We’ve again had another month with active posting, so all is well with this goal!

Interest Income: New this year is interest income from savings accounts my wife and I have. I figured I’d add it to my tracking since it really is passive income and something I’m comfortable disclosing. While you won’t ever see our full net worth or financial picture here, this is yet one more source of passive income for us, and puts us even closer to accomplishing our long-term goal of financial independence.

Moving forward, this will likely be a very steady number, with only larger macro-type events impacting it up or down. We are just about on pace to hit the annual figure for the year, with some additional savings needed to put things over the top.

Lending Club/Prosper: My P2P lending (also known as Marketplace Lending) accounts had a rough February. Both taxable accounts, one with Prosper and Lending Club, each returned a negative figure. While not ideal, this reflects a small trend I’ve seen in my accounts over the past couple years. Combined, they tend to do poorly during the spring, which I chalk up to people recovering from the holidays. Unfortunately, this does mean my streak of greater than $100 per month of net interest has been broken. As a result of this poor month, I’m well behind where I need to be to hit my goals this year.

Separate from my performance in this particular month, I’m in the process of reviewing my investment criteria to ensure I’m investing in notes that meet my personal risk/reward. I am still bullish on P2P lending, however, I am likely going to transition my investments to more predictable levels of risk, which will mean lower returns. From a macroeconomic perspective, we’ve been in a hell of a bull market run, and at some point things will flatten out or worsen. By positioning myself now, over the next couple of years my portfolios will have transitioned to a better risk level to accommodate any prolonged increase in defaults.

Dividends: I am very excited for the direction my dividend growth portfolio is heading. The first two months have been solid, but where things are really going to shine are in March and September. I will more than double my year-to-date totals by the end of the quarter. You can get a sneak preview on what I’m expecting from my dividend portfolio by checking out my 2015 Dividend Calendar.

My goal for the year is to receive $2,750 of dividends, which is quite a leap forward from the $1,539 received in 2014. During February, I earned $110.91 in dividends from seven different companies. Below is a list of all my dividends received by company and whether those dividends were reinvested directly. If you’d like a prettier place to view these dividends received, check out my 2015 Dividend Calendar.

As with previous months, I am directly reinvesting all my dividends until my annual dividend income falls between $2-3,000 per year in a particular account, allowing me to reinvest more selectively a few times per year. This of course is always subject to change. For the dividends in my Loyal3 Portfolio, they will be selectively reinvested as earned or combined with additional contributions monthly. You can read about the dividend reinvestment options with Loyal3 in my Snowball City – Loyal3 Dividends post. I’ve heard ‘rumors’ that once you receive $10 of dividends from one particular holding it will be reinvested. I’ll know for sure during March of this year as I receive in excess of $10 in a single payment from a stock.

When factoring in my dividend reinvestments, dividend increases/decreases, and stock purchases, my forward 12-month dividends increased to at $2,163.95. This represents an increase of $69.83 from January’s mark, and an increase of $725.64 from a year ago. Even cooler, my forward-12 month dividends average out to be $180.33 per month. Hitting my 2015 goal of $3,000 would bring that average up to $250 per month, so we’re inching closer and closer each month. Pretty exciting in my book!

The below chart reflects my dividends received, as well as my forward 12-month dividends since the beginning of 2013, when I started tracking things on the blog. I’ve switched this chart back to being a bar graph, as it more clearly shows the quarterly cycling of dividend income.

Passive Income Summary

During February, I received a record total of $225.01 of passive income, well diversified across my three different investment types, traditional interest income, dividends and peer to peer lending net interest. While $225 is a month not earth shattering in and of itself, just think about what $225 could buy you today? Perhaps a car payment? A portion of rent? All of your utility bills during these not-so-warm winter months?

You can find below my updated passive income chart showing my overall passive income for the last few years, since January 2013. My favorite part about this is the three-month moving average. While it isn’t fast, it is absolutely moving upward over time. I expect it to take a serious leap forward this year as my passive income grows based on the additions I’ve made over the previous years.

February, the shortest month of the year, wasn’t as strong as I would have liked, but I have high expectations that going forward, I will continue to make progress and build an ever growing stream of income.

Were you a PIMP this month, and if so, how did your passive income turn out?

Don’t hesitate to look around; you can find details on the various aspects of my passive income pieces under their respective pages, Lending Club, Prosper, and the completely revamped Dividend Growth Portfolio. Additionally, you can find all of my monthly updates under the Passive Income Updates page, and all my monthly updates and incremental progress towards my 2015 goals on the 2015 Goals page.

Comments

Not so much a PIMP month for me in February, but I still a small step forward. I am interested in that rumor you mentioned about LOYAL3 reinvestment’s. The only stock I knew of that automatically reinvested dividends was KRFT.

Not every month will be a big month, but as long as progress is being made, we can celebrate success. As for the Loyal3 reinvestment, I’ll be sure to post about it after this month when my UL and MCD dividends exceed that threshold.

Great title.
I think I wil try to PIMP myself out as well – LOL
My main objective is to increase dividends by 10% year over year.
That is through additional funds invested and re-investment of dividends.
I do not drip as I prefer to re-invest in what suits me at the time.
SO far this year Jan 2014 > Jan 2015 + 18%
Feb > Feb + 42%
Overall 2013 to 2014 +29%

I don’t know how 2015 will play out as the oil boys are on a slippery slope with dividend cut an even outright no more divs. Plus I will probably retire which will mean a reduced possibility of contributing to my retirement funds for this year and zero next year.

I think growing your dividend income is pretty feasible with the reinvestment of dividends coupled with dividend growth and some fresh capital. The challenge will be when the new additions disappear and you start relying on the income to fund your retirement. Without the flow of capital or dividends to reinvest, you’ll rely solely on dividend growth, which would be a stretch to hit 10% per year. Thus far, it looks like you’ve done a great job of exceeding the 10%, and should likely continue to do so until you retire.

I believe that most of the oil majors won’t have an issue maintaining their dividends, but the challenge is definitely out there for them to overcome with the prolonged reduction in oil prices. My one holding, ESV did reduce their dividend, but that was anticipated given their decline the niche within the O&G industry. Certainly a purchase where the capital would have been better suited elsewhere.

Having stocks like IPL hiking their dividend by 14% helps as well. More money to re-invest which means more dividends which means more stock to buy which means more divs, etc
But it can go down as well. It is OK to gamble a little but solid blue chips, even on the downside, usually maintain their dividends.

Absolutely, some will blow by the 10% margin with no problem. This is part of the reason why I’m slowly building positions in companies like SBUX and NKE. Two great companies that should be cash cows with substantial dividend growth ahead. However, it is all about balance. For every NKE, you need a JNJ or KO. While they will provide reliability and growth, they won’t break through the 10% ceiling on their own most years.

The more sources the better! In the months when Prosper doesn’t have a default or two (like this month), you’ll get the nice pretty picture from four different colored income sources.

I’m a fan of all three, and KMI is one of my all-time top favorites. I love the ‘toll collector’ model and the things Kinder has done over the last few years. SBUX is a play of future growth. Once their capital spending slows as growth slows, they will have tremendous free cash flow to reward shareholders.

Sorry to hear about your p2p accounts this is month number 3 for me so I’m just starting to see the payments come in this month. I agree with you on the market and as a matter of fact are we starting to see the dip now? lol

The more sources the better! I don’t just want diversification within an asset class, I want to be diversified across asset classes. Each have their own merits and weaknesses, and by diversifying, I help to shelter myself from swings in a particular area.

The blogging has been tremendous so far, however the P2P weakness really hurt me in terms of where I want to be for the year-to-date passive income. I’d like to see March bounce back in that regards in a strong way, but we shall see what happens.

I’m up 107.67$ from $0 in January. March tend to be a big month for everybody. I also bought a REIT that will pay every month as the stock were selling off today. That should fix the $0 problem of January next year.

I am very much looking forward to March, especially from a dividend standpoint. Based on your REIT comment, I can only guess that you likely picked up shares of Realty Income (O)? If so, it is a very well run REIT that I’d love to add to my portfolio. I should have some capital available to do just that later this month if everything works out as planned.

And yes, a monthly payer should solve the $0 month problem! Thanks for the visit!

Great PIMP month overall. The P2P is bound to have ups and downs but all in all it sounds like you are way ahead on it and it also diversifies your cash flow. Keep up the great work and hopefully w can get some more stock market volatility to juice future total return prospects. All the best.

I’m not too worried about the P2P dip. Over time it will all even out, with ebbs and flows as things change. The goal is to scale to the point where it never ebbs low enough to kick out a negative number, but I’m not quite there yet. I’m all for some market volatility as well. The more purchasing opportunities the better!

If I were to start today, I’d commit to at least $2,500 within the first three months, and a total of $5,000 within the first 12. It is simply a matter of building the account to be appropriately diversified limiting the impact of defaults.

Over the last couple of years, February through May tends to average lower than the rest of the year. I couldn’t pinpoint it to a particular month, but a range of months. It is likely that what I’m seeing isn’t statistically significant, but just a limited observation based on my own accounts.

The boost in traffic is certainly nice, and the big numbers are a credit to the other bloggers out there that link to me and help send traffic. I had two big referrals last month, and those drove in some tremendous volume. I can’t expect that every month, but I’m happy for the increase whenever it happens.

Congrats on another very successful month! Glad to see the blog picking up for you as well. Very nice.

Sorry to hear of the P2P troubles. I’ve never been personally interested in P2P, but you seem to have a great handle on your risk tolerance and correcting any of that should put you in a solid position moving forward.

The blog had some help this month with a couple of nice referrals, one from yourself with the inclusion in your roundup. For me, P2P is just a different asset class, and one I’m glad to have exposure to in some fashion. I don’t plan on really leveraging traditional fixed income investments, so P2P fills that void for me in some way.

My understanding is that it is dependent on the company and not the volume, but the rumor persists. I will know conclusively after this month for UL and MCD, so those are two others we can check off the list in one fashion or another.

I don’t know if I was a PIMP in February or not, but you definitely had a great month. I especially love how you have multiple sources of income, and the dividend income seems to be the best (definitely have to get some of that for myself too).
Hope March will be another great month!

You were PIMPing my friend. You’ve put the first month of business ownership behind you, and it is hopefully the start of a successful venture for you. For me, dividend income will ultimately be the largest piece of the puzzle here on the site, and it makes sense given the predictability and consistency of the income.

Strong February. I am interested in seeing how that Loyal3 DRIP works and that moving 3 month average. The 3 month average is especially applicable to North American investors in general, with the standard quarterly cycle as it stands.

I’m not sure the DRIP even exists, currently just a rumor outside of KRFT, which does directly reinvest. The three-month average is really the best way to look at dividends, with the quarterly cycle the way it is. International stocks such as BBL throw things off, but for a quick snapshot, it makes sense.

We’re each on our own journey towards building a passive income stream, so you’ll get to a higher level soon enough. Building takes time, and depending on our individual situations and challenges, there will be different growth rates for each of us.

Great looking month from multiple sources. While I’m quite content with my dividend income I do think abut trying to diversify my income streams beyond just dividends. Love your blog stats too. Awesome page view count. Happy to be one of your regular readers. Thanks for sharing this update.

The more sources the better in my opinion. It isn’t enough to just own a bunch of strong, dividend-paying companies, but to expand my exposure to different types of income producing assets. I’d love to see where you head if you decide to add some additional income streams. The blog stats are certainly fun to check out, and I’m thankful for the support of those who put me in a position to show increasing numbers the way I have.

Glad to have you as a regular reader DH, and I appreciate your comments and support.

Hahaha! Loving the PIMP idea! Really In my experience, summer months mean lower traffic on my blogs so you might take that into consideration as well. Although dividend investors and readers seem to be regular people!

The PIMP concept is perfect, no pun intended. It really reflects the goal that we’re each striving for, passive income with limited responsibility and work. And I expect ebbs and flows to my traffic. While I appear to be right on target for my annual goal, there will likely be dips in traffic along that way that must be compensated for with higher months.

Excellent February! I love the diversification. Sorry to hear about the decline in your P2P payments. Did you find that your higher risk loans were the ones defaulting or being late? The C/D and below? Or did this trend affect everything, including the A-rated loans. I’ll blog about it soon once everything gets issued, but I am about 50% in B and the rest is split evenly between A and C.

Lastly, are you counting the interests plus capital repayment into your passive income or just the interest payments. Thanks!

Just the nature of P2P lending, and why diversification is extremely important. I haven’t had a chance to really dive into which ones were defaulting yet, but overall, I’ve seen defaults across the various loan grades. As of now, I pretty much only have C-E grade loans, but will likely expand downward to B to start reducing the risk of my portfolio.

As for my ‘net interest’ number, this is simply the ending balance of a month less the beginning balance. By calculating it this way, I’m able to account for all defaults, fees, and other account activity. Of course, on months I add capital, I reverse this out as well.

Let me know if you have any other questions and best of luck with your account!

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I am not an investing professional, and as such, any investments or financial topics discussed on this page are my opinions only, and should not be considered financial advice or recommendations to purchase or sell securities, or any other investments.